SEA HARVEST GROUP LIMITED - Unaudited Interim Results For The Six Months Ended 30 June 2018

Release Date: 28/08/2018 16:36
Code(s): SHG
 
Wrap Text
Unaudited Interim Results For The Six Months Ended 30 June 2018

Sea Harvest Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 2008/001066/06
JSE Code: SHG
ISIN: ZAE000240198
"Sea Harvest" or "the Company" or "the Group"

UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018

Commentary

Key Performance Indicators

   Year ended                                                       Period Ended       Period Ended  
December 2017                                                          June 2018          June 2017
    2 131 054   Revenue (R'000)                                        1 004 288          1 056 961   
          61%   International Revenue Mix                                    59%                61%   
      716 790   Gross Profit (R'000)                                     367 646            353 515   
        33.6%   Gross Profit Margin (%)                                    36.6%              33.4%   
      333 813   Operating Profit (R'000)                                 165 027            167 715   
        15.7%   Operating Profit margin                                    16.4%              15.9%   
      266 945   Profit for the period (R'000)                            111 222            135 888   
  217 859 827   Weighted Average Number of Shares (WANOS)            240 018 063        195 379 525   
        119.0   Basic Earnings per share (cents)                            47.7               67.0   
      235 317   Headline Earnings (R'000)                                111 325            110 664   
        108.0   Basic Headline Earnings per share (cents)                   46.4               56.6   
        582.4   Net Asset Value per share (cents)                          592.9              531.9   
        14.95   ZAR : Euro average exchange rate(1)                        14.95              14.29   
        10.27   ZAR : AUD average exchange rate(1)                          9.56              10.06   
        1 250   Closing Share Price (cents)                                1 350              1 370   

(1) Average spot exchange rate at which sales were recorded.

HIGHLIGHTS FOR THE PERIOD

-    The Acquisition of Viking Fishing Group as part of a B-BBEE consortium, and 51% of the shares of Viking
     Aquaculture, which became effective on 2 July 2018. This is a transformational transaction for the Group
     delivering diversification into other species and high value aquaculture and will be earnings accretive
     from the outset.
-    Sea Harvest Group achieved Level 1 B-BBEE contributor status with a score of 100.37, an increase from
     Level 2 with a score of 98.9, making it one of the most transformed businesses in the sector.
-    The conversion of the Harvest Mzansi to a hake factory freezer trawler was completed within budget (R250 million)
     and on time (April 2018).
-    The acquisition and integration of two Spanish Mackerel vessels and the related licences in
     Western Australia.
-    Gross profit margin increased to 36.6% (2017: 33.4%), driven by further efficiency gains and Rand weakness.

TRADING AND FINANCIAL PERFORMANCE

The Sea Harvest Group delivered headline earnings for the six months ended 30 June 2018 of R111.3 million,
an increase of 1% compared to the same period last year (2017: R110.7 million), after absorbing transaction
costs relating to the Viking acquisition.

Group revenue for the period decreased by 5% to R1.0 billion (2017: R1.1 billion), impacted by the 5% reduction
in Total Allowable Catch (TAC) in South Africa and the delayed start to the prawn fishing season in Australia. The
impact of these factors was partially offset by global sourcing, a weaker Rand and firm pricing, which benefited
from continued global demand for high value, sustainably certified wild caught seafood with limited supply.

Gross profit for the period increased by 4% to R367.7 million (2017: R353.5 million) and the gross
profit margin improved to 36.6% (2017: 33.4%). The expansion in the gross profit margin has been driven
by further efficiency gains across both the fleet and factory operations, an increase in higher margin
export volumes, price increases and a weaker Rand.

Other operating income decreased to R26.9 million (2017: R30.2  million), mainly due to lower foreign
exchange hedge gains for the period, with the 2017 average hedge rates benefiting from the sharp
devaluation of the Rand in early 2016.

Operating expenses for the period increased by 6% to R229.5  million (2017: R215.9  million), after
absorbing transaction costs relating to the Viking acquisition. Normalising for these non-recurring
costs, operating expenses increased by only 1%, benefiting from good cost control measures across
the Group.

The Group delivered operating profit before joint venture and associate income of R165 million
for the period, 2% lower than the same period last year (2017: R167.7 million), impacted by the lower
revenue and the Viking transaction costs referred to above.

Operating profit before net finance cost and taxation of R166.3  million was 19% lower than
the prior period (2017: R205.6  million), as a result of a number of once-off, non-cash benefits being
recorded in the first half of 2017, including a gain on disposal of interest in a joint venture of R23 million
and a fair value gain on the initial recognition of an option of R14 million.

Profit after tax of R111.2  million for the period decreased by 18% compared to the prior period
(2017:  R135.9  million), in line with the decrease in operating profit before net finance cost and taxation.

Earnings per share (EPS) decreased by 29% to 47.7 cents per ordinary share (2017: 67.0 cents)
and headline earnings per share (HEPS) decreased by 18% to 46.4 cents per ordinary share
(2017: 56.6 cents). The decrease in both EPS and HEPS was mainly attributable to an increase in
the weighted average number of shares in issue ("WANOS"), which increased from 195 379 525 at
30 June 2017 to 240 018 063 at 30 June 2018, as well as lower earnings as set out above. It is important
to note that the increase in the WANOS was as a result of the Group restructure and the subsequent
listing of the Group on the JSE on 23 March 2017. The shares issued at listing were included in the determination 
of WANOS for only 99 days in 2017, compared to the full period in 2018.

South African Operations: South African sales volumes for the period were lower than 2017,
impacted by the 5% reduction in the TAC, which was partly offset by the Group's global sourcing strategy.
Revenue was on par with 2017, with the impact of the lower volumes offset by higher average prices.
Revenue and volumes from export markets grew by 3%, after the 5% reduction in the TAC. The  export
mix of total sales increased to 54% of sales in value terms (2017: 53%) and 46% of volumes (2017: 43%).
The Rand weakened by 3% across the currencies in which Sea Harvest trades. Revenue from the
local South  African market, which includes retail and foodservice, was 1% lower than prior year,
impacted by the continued challenging local retail environment, the 5% TAC reduction and the increase
in export volume mix, which saw local volumes reduce by 7% compared to the same period last year.

Australian Operations: Revenue for the period decreased by 23% to R174.1  million (2017:
R227.1  million), driven by the lower landings of prawns, which were impacted by the delayed
start to the Shark  Bay prawn season. Average realisations on prawns were well up, benefiting
from a larger size mix and strong demand. As a result of the lower volumes and the resultant lower
revenues, the business reported an after-tax loss of R5.1 million for the period, compared to a profit
after tax of R12 million in the prior period.

CASHFLOW AND FINANCIAL POSITION

The Group generated cash of R194.5 million (2017: R229.1  million) from its operations in the period,
before changes in working capital and R125 million net cash from its operations after the investment in
working capital. The increase in working capital was due to higher inventory holdings and an increase
in debtors due to higher sales levels in the last two months of the period, compared to the last two
months of the prior period, partly offset by higher payables due to increased capital expenditure
relating to the Harvest Mzansi and Marel projects.

During the period the Group utilised R129.5 million in investing activities, including a further R44.1 million
on the conversion of the Harvest Mzansi into a hake factory freezer trawler and progress payments of
R30.9 million on the Marel factory processing facility in Saldanha Bay. The Group disposed of the Harvest
Atlantic Hope for an amount of R59 million. The Group raised a further R67  million of borrowings during the
period which was used to fund investing activities. The Group paid R78.5 million in its maiden dividend.

The Group ended the period with R321.2  million of cash on hand.

Driving transformation

Sea Harvest is a c. 80% black-owned business, and as such remains committed to driving transformation
within the fishing industry and communities within which it operates. Significant resources are focused
on skills development, employment equity, supply and enterprise development initiatives, as well as
projects focused on job creation, youth and rural development. This focus has been recognised by
Sea Harvest achieving Level 1 B-BBEE contributor status with a score of 100.37, an increase from Level
2 with a score of 98.9, making Sea Harvest one of the most transformed businesses in the fishing sector.

Dividends

No interim dividend is declared or proposed for the six months ended 30 June 2018.  

OUTLOOK 

Sea Harvest expects to see continued global demand for high value, wild caught, MSC certified
species such as Cape Hake, which will drive continued export growth and firm international pricing. Export
pricing should further benefit from a weaker Rand in the second half of the year. Local retail volumes are
expected to come under continued pressure as a result of the challenging economic environment, which will
necessitate sustained promotional activity, impacting average pricing.

On the supply side, higher margin export growth will be supported by the introduction of the Harvest Mzansi
into the fleet, whose frozen-at-sea products are targeted towards export markets. In addition, the acquisition
of Viking Fishing will drive additional export volume growth, in particular into the Iberian Peninsula, as well
as growth in foodservice and wholesale channels.

Strategic investments within the fish processing factory in Saldanha Bay during the third quarter will
drive further production efficiencies, although with c. R18m of restructuring costs in the second half of
2018, earnings are only expected to benefit from 2019 onwards.

In Australia, prawn volumes in the second half of the year are expected to be better than those of the first
half, due to the delayed start to the prawn fishing season. Prawn catch rates since the commencement
of the season have been below 2017 levels and this trend is expected to continue through the second half
of the year.

On 2 July 2018 the acquisition of 100% of the assets of Viking Fishing as part of a B-BBEE consortium, and 51%
of the shares of Viking Aquaculture, became effective.

This transformational transaction is earnings accretive for the Group from the outset, delivering value through
the complementary nature of the fishing businesses and diversification into other wild caught species and
aquaculture.

On 28 August 2018, the Group announced that its wholly-owned subsidiary, Cape Harvest Food Group
Proprietary Limited, has concluded a share purchase agreement to acquire the entire issued share capital
of Ladismith Cheese Company Proprietary Limited for R527 million. The transaction is subject to conditions
normal for a transaction of this nature. 

Established in 1999, Ladismith Cheese is a value adding dairy processing company based in Ladismith
in the Western Cape. The company's primary business is the production, distribution, marketing and
sales of cheese, butter and milk powders to South African retail, wholesale and food service markets.
The company generated revenue of R681 million and profit after tax of R57.7 million for the financial year
ended 31 January 2018.

The acquisition is a further step in the execution of Sea Harvest Group's stated investment strategy of growing
through:

i.   organic margin enhancement within existing operations;
ii.  acquisitions of high value wild caught species in the South African and Australian seafood sectors;
iii. acquisitions within high value aquaculture
     sectors; and
iv.  acquisitions in complementary sectors of the South African food and agricultural industry
     which exhibit strong fundamentals, growth and where the Group is able to leverage its core
     competencies and strengths.

To this end, the transaction represents an acquisition of a profitable branded FMCG food manufacturer of
significant scale in the food and agricultural sector with a long track record, strong national brand and a
proven management team. The transaction is expected to conclude in the 4th quarter of 2018.

On behalf of the Board

F Robertson                  F Ratheb
Chairman                     CEO

Cape Town
28 August 2018

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the six months ended 30 June 2018

Audited Year                                                           Unaudited          Unaudited
       ended                                                    six months ended   six months ended
 31 December                                                             30 June            30 June
        2017                                                                2018               2017
       R'000                                                               R'000              R'000
   2 131 054     Revenue                                               1 004 288          1 056 961
 (1 414 264)     Cost of sales                                         (636 642)          (703 446)
     716 790     Gross profit                                            367 646            353 515
      74 707     Other operating income                                   26 903             30 172
   (114 771)     Selling and distribution expenses                      (58 137)           (62 301)
    (15 166)     Marketing expenses                                      (6 369)            (6 662)
   (327 747)     Other operating expenses                              (165 016)          (147 009)
                 Operating profit before joint venture
     333 813     and associate income                                    165 027            167 715
                 Share of profit of joint venture and
       1 000     associate                                                     -              1 000
                 Gain on the disposal of interest in
      23 155     joint venture                                                 -             23 155
      24 825     Fair value gains                                          1 254             13 727
                 Operating profit before net finance cost
     382 793     and taxation                                            166 281            205 597
      17 206     Investment income                                        13 057              5 862
    (38 848)     Interest expense                                       (20 284)           (30 045)
     361 151     Profit before taxation                                  159 054            181 414
    (94 206)     Taxation                                               (47 832)           (45 526)
     266 945     Profit after taxation                                   111 222            135 888
                 Profit for the period attributable to:
                 Shareholders of Sea Harvest Group
     259 344     Limited                                                 114 410            130 955
       7 601     Non-controlling interests                               (3 188)              4 933
     266 945                                                             111 222            135 888
                 Earnings per share (cents)
       119.0     - Basic                                                    47.7               67.0
       114.7     - Diluted                                                  45.9               66.1

CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
for the six months ended 30 June 2018

Audited Year                                                          Unaudited           Unaudited
       ended                                                   six months ended    six months ended
 31 December                                                            30 June             30 June
        2017                                                               2018                2017
       R'000                                                              R'000               R'000
     266 945    Profit after taxation                                   111 222             135 888
                Other comprehensive (loss)/income
                Items that may be reclassified
                subsequently to profit or loss:
    (20 224)    Movement on cash flow hedging reserve                  (27 985)            (17 917)
                Exchange differences on foreign
    (11 576)    operations                                               24 037               7 382
                Items that may not be reclassified
                subsequently to profit or loss:
                Net remeasurement gain on defined
       1 625    benefit plan                                                  -                   -
    (30 175)    Other comprehensive loss, net of tax                    (3 948)            (10 535)
                Total comprehensive income for
     236 770    the period                                              107 274             125 353
                Total comprehensive income
                attributable to:
                Shareholders of Sea Harvest Group
     233 403    Limited                                                 104 916             119 050
       3 367    Non-controlling interests                                 2 358               6 303
     236 770                                                            107 274             125 353

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2018

                                                                                          Restated*
Audited Year                                                            Unaudited         Unaudited
       ended                                                     six months ended  six months ended
 31 December                                                              30 June           30 June
        2017                                                                 2018              2017
       R'000                                             Notes              R'000             R'000
                ASSETS
                Property, plant, equipment and
     808 192    vehicles(1)                                               866 908           531 180
     489 805    Intangible assets(2)                                      548 820           505 730
      84 220    Goodwill                                                   88 626            87 811
      25 264    Available-for-sale investment                5                  -            25 264
                Investment at fair value through
           -    other comprehensive income                   5             25 264                 -
      24 825    Financial assets                             5             26 080            13 953
      72 489    Loans to related parties                     6             72 489            70 501
       1 959    Loans to supplier partners                                    980                 -
         243    Deferred tax assets                                           244                 -
   1 506 997    Non-current assets                                      1 629 411         1 234 439
     304 001    Inventories                                               384 778           324 982
     332 578    Trade and other receivables                               423 501           359 280
      41 896    Financial assets                             5              2 991            27 687
           -    Tax assets                                                     46                 -
     383 047    Cash and bank balances                                    321 155           316 222
   1 061 522    Current assets                                          1 132 471         1 028 171
   2 568 519    TOTAL ASSETS                                            2 761 882         2 262 610

Notes
(1) Movement in property, plant and equipment during the period, includes further capitalisation of the Harvest Mzansi costs of R44.1 million, Marel
    Flowline project of R30.9 million and disposal of Atlantic Hope with a carrying value of R56 million.
(2) Additions to intangible assets during the period, include the acquisition of Spanish Mackerel rights by Mareterram valued at R36 million.
*   Refer to note 9.

                                                                                          Restated*
Audited Year                                                           Unaudited          Unaudited
       ended                                                    six months ended   six months ended
 31 December                                                             30 June            30 June
        2017                                                                2018               2017
       R'000                                            Notes              R'000              R'000
                 EQUITY AND LIABILITIES
   1 294 875     Stated capital                                        1 291 993          1 295 771
    (71 476)     Other reserves                                         (76 897)           (62 586)
     174 267     Retained earnings                                       210 170             43 302
                 Attributable to shareholders of
   1 397 666     Sea Harvest Group Limited                             1 425 266          1 276 487
     168 313     Non-controlling interests                               170 718            152 993
   1 565 979     Capital and reserves                                  1 595 984          1 429 480
                 Long-term
     315 825     interest-bearing borrowings                             347 813            121 398
      26 342     Employee related liabilities                             26 372             26 703
      18 789     Share-based payment liability                            25 373                  -
      12 110     Deferred grant income                                    11 499             12 920
      59 348     Financial liabilities                      5             41 252             61 267
     205 277     Deferred taxation                                       221 206            182 245
     637 691     Non-current liabilities                                 673 515            404 533
                 Short-term
      31 298     interest-bearing borrowings                              79 754             72 150
     269 356     Trade and other payables                                364 331            310 695
       1 505     Short-term deferred grant income                          1 541              1 581
      20 848     Financial liabilities                      5             38 748             22 548
      30 980     Short-term provisions                                     6 949                  -
      10 862     Taxation                                                  1 060             21 623
     364 849     Current liabilities                                     492 383            428 597
   2 568 519     TOTAL EQUITY AND LIABILITIES                          2 761 882          2 262 610

* Refer to note 9.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2018

                                                                                          Restated*
Audited Year                                                            Unaudited         Unaudited
       ended                                                     six months ended  six months ended
 31 December                                                              30 June           30 June
        2017                                                                 2018              2017
       R'000                                                                R'000             R'000
     669 447    Balance at the beginning of the period                  1 565 979           669 447
                Attributable to:
                Shareholders of Sea Harvest Group
     517 404    Limited                                                 1 397 666           517 404
     152 043    Non-controlling interests                                 168 313           152 043
                Total comprehensive income for the
                period attributable to shareholders of
     233 405    Sea Harvest Group Limited                                 104 916           119 050
     259 344    Profit for the period                                     114 410           130 955
                Movements in other items of
    (25 939)    comprehensive income, net of tax                          (9 494)          (11 905)
                Movements attributable to shareholders
                of Sea Harvest Group Limited
   1 294 047    Shares issued                                                   -         1 294 943
           -    Shares repurchased(1)                                     (2 882)                 -
    (55 000)    Recognition of FSP reserve                                      -          (55 000)
   (368 409)    Redemption of preference shares                                 -         (368 409)
                Distributions to participants of share
   (218 771)    trusts and repurchase of shares                                 -         (218 771)
           -    Dividends paid                                           (78 506)                 -
      15 178    Share-based payments                                        4 072            10 403
                Reclassification of share-based
           -    payments                                                        -          (23 133)
                Transfer to share-based payment liability
    (19 789)    (modification)                                                  -                 -
                Further acquisition of investment in
       (399)    subsidiary                                                      -                 -
                Movement attributable to non-controlling
      16 270    interests                                                   2 405               950
   1 565 979    Balance at the end of period                            1 595 984         1 429 480

Notes
(1) 217 175 were repurchased for purposes of the forfeitable share plan.
*  Refer to note 9.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2018

Audited Year                                                            Unaudited         Unaudited
       ended                                                     six months ended  six months ended
 31 December                                                              30 June           30 June
        2017                                                                 2018              2017
       R'000                                                                R'000             R'000
                Operating activities
     266 945    Profit after taxation                                     111 222           135 888
     163 296    Adjustments for non-cash and other items                   83 233            93 190

                Operating cash flows before changes
     430 241    in working capital                                        194 455           229 078
    (14 255)    Increase in inventories                                  (74 433)          (31 627)
    (53 547)    Increase in trade and other receivables                  (85 476)          (74 873)
                Increase/(decrease) in trade and
    (21 448)    other payables                                             90 708            19 745

     340 991    Cash generated from operations                            125 254           142 323
      17 206    Investment income received                                 13 057             5 862
    (80 011)    Income taxes paid                                        (34 707)          (44 142)
    (25 544)    Interest paid                                            (18 156)          (21 177)

                Net cash generated from operating
     252 642    activities                                                 85 448            82 866

                Investing activities
                Proceeds on disposal of property, plant,
       2 855    equipment and vehicles                                     59 392                 -
                Acquisition of property, plant, equipment
   (369 876)    and vehicles                                            (152 370)          (48 386)
     (1 526)    Acquisition of intangible assets                         (36 564)           (1 494)

   (368 547)    Net cash utilised in investing activities               (129 542)          (49 880)

Audited Year                                                            Unaudited         Unaudited
       ended                                                     six months ended  six months ended
 31 December                                                              30 June           30 June
        2017                                                                 2018              2017
       R'000                                                                R'000             R'000
                Financing activities
   1 239 025    Shares issued, net of listing costs                             -         1 239 943
           -    Shares repurchased                                        (2 882)                 -
                Redemption of B and C preference
   (368 409)    share capital                                                   -         (368 409)
                Repayment of B and C preference
   (144 269)    dividends                                                       -         (144 269)
   (332 024)    Repayment of borrowings                                     (361)         (301 478)
     257 968    Proceeds from borrowings                                   66 813            67 886
    (22 256)    Payments of financial liabilities                         (2 975)          (25 284)
                Repurchase of shares and distributions
   (218 771)    to participants of share trusts                                 -         (218 771)
           -    Dividends paid                                           (78 506)                 -
    (80 194)    Amounts advanced to related parties                             -         (120 776)
      14 971    Rights issue in subsidiary                                      -                 -
     (1 479)    Further investment in subsidiary                                -                 -
                Net cash (utilised in)/generated from
     344 562    financing activities                                     (17 911)           128 842
                Net (decrease)/increase in cash and
     228 657    cash equivalents                                         (62 005)           161 828
                Cash and cash equivalents at the
     154 404    beginning of the period                                   383 047           154 404
                Effects of exchange rates on the balance
        (14)    of cash held in foreign operation                             113              (10)
                Cash and cash equivalents at the end
     383 047    of the period                                             321 155           316 222

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL Statements
for the six months ended 30 June 2018

1.  BASIS OF PREPARATION

    The condensed consolidated interim financial statements have been prepared in accordance with
    and containing the information required by IAS 34: Interim Financial Reporting, the SAICA Financial
    Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
    Pronouncements as issued by the Financial Reporting Standards Council, the Listings Requirements
    of the JSE Limited and the requirements of the Companies Act of South Africa, No. 71 of 2008.
    The condensed financial information has been prepared under the supervision of the Chief Financial
    Officer, JP de Freitas CA(SA).

    The information has not been audited or reviewed by the Group's auditors, Deloitte & Touche.

2.  ACCOUNTING POLICIES

    The accounting policies applied in the preparation of these condensed consolidated interim financial
    statements are in terms of International Financial Reporting Standards and are consistent with those
    applied in the financial statements for the year ended 31 December 2017, except as set out below.

    The Group adopted IFRS 9: Financial Instruments and IFRS 15: Revenue from Contracts with Customers
    on 1  January 2018. As reported previously, the adoption of these standards has an immaterial
    impact on the Group. The implementation of IFRS 9 resulted in the reclassification of the R25 million
    "available-for-sale" investment to an equity instrument irrevocably designated as at fair value though
    other comprehensive income as disclosed in note 5. There is no reclassification of fair value changes
    on the "available-for-sale" investments as these are already reported in equity. The adoption of IFRS 15
    had no material impact on the Group.

     Audited Year                                                       Unaudited         Unaudited
            ended                                                six months ended  six months ended
      31 December                                                         30 June           30 June
             2017                                                            2018              2017
            R'000                                                           R'000             R'000

3.  HEADLINE EARNINGS PER SHARE
3.1 DETERMINATION OF HEADLINE EARNINGS
                      Profit for the period attributable
                      to shareholders of Sea Harvest
          259 344     Group Limited                                       114 410           130 955
                      (Profit)/loss on disposal of property,
          (3 876)     plant, equipment and vehicles                       (4 284)               408
                      Impairment of property, plant,
                -     equipment and vehicles                                    -             1 230
                      Reversal of impairment of property,
                -     plant, equipment and vehicles                             -             (436)
                      Realised profit on disposal of interest
         (23 155)     in joint venture                                          -          (23 155)
            3 004     Total tax effects of adjustments                      1 199             1 662
          235 317     Headline earnings for the period                    111 325           110 664

3.2 CALCULATION OF WEIGHTED AVERAGE
    NUMBER OF ORDINARY SHARES
                      Weighted average number of shares
                      on which earnings and headline
      217 859 827     earning per share are based                     240 018 063       195 379 525
                      Weighted average number of shares
                      on which diluted earnings and diluted
      226 173 525     headline earnings per share are based           249 279 116       198 154 131
                      Reconciliation of weighted average
                      number of shares between basic
                      and diluted earnings per share and
                      headline earnings and dilute headline
                      earnings per share:
      217 859 827     Basic                                           240 018 063       195 379 525
        8 313 698     Dilutive instruments                              9 261 053         2 774 606
      226 173 525     Diluted                                         249 279 116       198 154 131
                      Headline earnings per share (cents)
            108.0     - Basic                                                46.4              56.6
            104.0     - Diluted                                              44.7              55.8

     Audited Year                                                      Unaudited          Unaudited
            ended                                               six months ended   six months ended
      31 December                                                        30 June            30 June
             2017                                                           2018               2017
            R'000                                                          R'000              R'000

4.  SEGMENTAL RESULTS

  The Groups' reportable segments under IFRS 8: Operating
  Segments, are the South African operations and the
  Australian operations.
                    Segment revenue
        1 644 206   SA Operations(1)                                     830 187            829 890
          486 848   Australia Operations                                 174 101            227 071
        2 131 054   Total revenue                                      1 004 288          1 056 961
                    Segment profit/(loss)
                    from operations
          312 262   SA Operations                                        166 463            155 244
           21 551   Australia Operations                                 (1 436)             12 471
                    Operating profit before associate
          333 813   and joint venture income                             165 027            167 715
           24 825   Fair value gains                                       1 254             13 727
                    Gain on the disposal of interest in
           23 155   joint venture                                              -             23 155
                    Share of profits of joint venture
            1 000   and associate                                              -              1 000
           17 206   Investment income                                     13 057              5 862
         (38 848)   Interest expense                                    (20 284)           (30 045)
          361 151   Profit before taxation                               159 054            181 414
                    Total assets
        1 732 386   SA Operations                                      1 833 243          1 677 271
          836 133   Australia Operations                                 928 639           585 339*
        2 568 519                                                      2 761 882          2 262 610
                    Total liabilities
          638 084   SA Operations                                        744 527            430 746
          364 456   Australia Operations                                 421 371           402 384*
        1 002 540                                                      1 165 898            833 130

    (1) Revenue excludes inter-segmental revenue of R60.9 million (2017: R47.8 million) which is eliminated on consolidation.
    *  Refer to note 9.

     Audited Year                                                       Unaudited         Unaudited
            ended                                                six months ended  six months ended
      31 December                                                         30 June           30 June
             2017                                                            2018              2017
            R'000                                                           R'000             R'000

5.  OTHER FINANCIAL ASSETS AND LIABILITIES
           66 721    Financial derivative assets                           29 071            41 640
                     Non-current portion of
           24 825    financial assets(1)                                   26 080            13 953
           41 896    Current portion of financial assets(2)                 2 991            27 687
                     Other financial asset
           25 264    Available-for-sale investment(3)                           -           25 264
                     Investment at fair value through other
                 -   comprehensive income(3)                               25 264                 -
                     Financial derivative liabilities
              130    Current portion of financial liabilities(2)           16 706                 -
                     Other financial liability
           80 066    Fishing licence liability(4)                          63 294            83 815
                     Non-current portion of
           59 348    financial liability                                   41 252            61 267
           20 718    Current portion of financial liability                22 042            22 548

    (1) CALL OPTION DERIVATIVE

        Included in non-current financial assets is a call option to acquire 100% of the shareholding in Vuna
        Fishing Company Proprietary Limited from Vuna Fishing Group Proprietary Limited. The fair value
        was independently determined by an expert using the Black-Scholes option pricing model. The call
        option financial asset has been classified as a non-current asset at 30 June 2018 due to the expected
        exercise date thereof exceeding 12  months from the reporting date. The call option disclosed in
        financial assets is regarded as a Level 3 financial instrument for fair value measurement purposes.
        Level 3 fair value measurements are those derived from valuation techniques that include inputs for
        the asset or liability that are not based on observable market data (unobservable inputs).

    (2) FINANCIAL DERIVATIVE ASSETS AND LIABILITIES

        Financial assets and liabilities arise from hedging contracts entered into by the Group for the
        purpose of minimising the Group's exposure to foreign currency volatility. Hedging contracts are
        regarded as Level  2 financial instruments for fair value measurement purposes. Level  2 fair value
        measurements are those derived from inputs that are observable for the asset or liability, either
        directly (i.e. as prices) or indirectly (i.e. derived from prices).
     
    (3) INVESTMENT AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

        The Group holds 10% of the ordinary share capital of Desert Diamond Fishing Proprietary Limited, a
        company involved in the fishing and fishing processing industries.

        This investment was previously classified as "available-for-sale". With the adoption of IFRS  9, the
        Group has irrevocably elected to classify this investment as measured at fair value through other
        comprehensive income because it is held as a long-term strategic investment that is not expected
        to be sold in the short to medium term. As a result, investment with a fair value of R25 million was
        reclassified from "available-for-sale" to investment at fair value through other comprehensive income.

        The Group reassesses the valuation of the investment annually, by using an asset valuation method
        performed by an independent valuator.

        The investment is regarded as a Level 3 financial instrument. Level 3 fair value measurements are
        those derived from valuation techniques that include inputs for the asset or liability that are not
        based on observable market data (unobservable inputs).

    (4) FISHING LICENCE LIABILITY


        The fishing licence liabilities relate to the Shark Bay Prawn Managed Fishery Voluntary Fisheries
        Adjustment Scheme (VFAS). The VFAS operates from 12  November 2010 until 1  July 2021.
        Mareterram owns ten fishing licences in the Shark Bay region. The liabilities shown represent
        present values discounted at the five year Australian Corporate Bond rate. Fishing licence liabilities
        are carried at amortised cost.

     Audited Year                                                      Unaudited         Unaudited
            ended                                               six months ended  six months ended
      31 December                                                        30 June           30 June
             2017                                                           2018              2017
            R'000                                                          R'000             R'000

6.  RELATED PARTY TRANSACTIONS
6.1 RELATED PARTY LOANS
                     Loans to related parties
                     Vuna Fishing Company Proprietary
           27 420    Limited                                              27 420            27 420
                     Vuna Fishing Group Proprietary
           45 069    Limited                                              45 069            43 081
           72 489    Total                                                72 489            70 501
                     Interest paid to related parties
           10 708    Brimco Proprietary Limited                                -            10 708

6.2 RELATED PARTY TRANSACTIONS
                     Sales to related parties
                     SeaVuna Fishing Company
                     Proprietary Limited
                     (Joint venture of Brimstone
           34 880    Investment Corporation Limited)                      18 913            19 873
                     Purchases from related parties
                     SeaVuna Fishing Company
                     Proprietary Limited
                     (Joint venture of Brimstone
          165 731    Investment Corporation Limited)                     103 159            75 381

    In terms of the supply agreement with Vuna Fishing Company Proprietary Limited ("Vuna") and SeaVuna
    Fishing Company Proprietary Limited ("SeaVuna"), fish caught by Vuna and SeaVuna is marketed by
    Sea Harvest Corporation Proprietary Limited.

      Audited Year                                                     Unaudited          Unaudited
             ended                                              six months ended   six months ended
       31 December                                                       30 June            30 June
              2017                                                          2018               2017

7.  STATED CAPITAL (number)
                      In issue (number)
       251 362 907    Ordinary shares                                251 362 907        251 362 907
      (11 389 304)   Held as treasury shares                        (10 959 595)       (11 389 304)
       239 973 603                                                   240 403 312        239 973 603

    At 30 June 2018, the movement in stated capital is as follows:
    
                                                    TOTAL SHARES    LESS TREASURY         TOTAL NET
                                                        IN ISSUE           SHARES   SHARES IN ISSUE
    Opening balance                                  251 362 907       11 389 304       239 973 603
    Shares repurchased                                         -          217 175         (217 175)
    Shares vested                                              -        (646 884)           646 884
    Closing balance                                  251 362 907       10 959 595       240 403 312

8.  SHARE-BASED PAYMENTS

    The Group has two controlled trusts which have been established as vehicles through which
    certain executives, senior management and employees have made an investment in or acquired an
    economic exposure to an investment in shares in the Company and a forfeitable share plan which
    was adopted to attract, retain, incentivise and reward the right calibre of employees.

    SEA HARVEST MANAGEMENT INVESTMENT TRUST NO.2

    The Sea Harvest Management Investment Trust No. 2 was established as an investment vehicle for
    senior executives of Sea Harvest Corporation Proprietary Limited (subsidiary) to acquire shares in
    the Company.

    The scheme is cash settled with the fair value of the liability measured at every reporting date.

    SEA HARVEST EMPLOYEE SHARE TRUST

    The Sea Harvest Employee Share Trust, was established as an investment vehicle for employees of
    Sea Harvest Corporation Proprietary Limited (subsidiary) to acquire an economic exposure to an
    investment in shares in the Company.

    The scheme is cash settled with the fair value of the liability measured at every reporting date.

    FORFEITABLE SHARE PLAN

    On 23 March 2017, the Group established a forfeitable share plan. In terms of the forfeitable share
    plan,executive directors and senior managers may be awarded performance, bonus and retention
    shares in the Group. The performance shares are linked to a requirement of continued employment
    over the prescribed period, the Group's performance and strategic, individual performance
    conditions which have to be met. Shares are granted to participants for no consideration. These
    shares participate in dividends and shareholder rights from grant date. The scheme is accounted for
    as an equity-settled share based payment scheme.
    
                                                           The Sea
                                                           Harvest          The Sea
                                                        Management          Harvest
                                                        Investment         Employee     Forfeitable
                                                        Trust No.2      Share Trust      Share Plan
    Grant Date                                       31 March 2014    31 March 2014   23 March 2017
    Number of shares granted                             8 257 898        4 258 138       4 400 065
    Fair value of shares at grant date (R)               8 788 000        5 155 000      46 283 566
    Expiry Date                                      31 March 2020    31 March 2022   23 March 2020

                                                                                        Service and
    Vesting conditions                                     Service          Service     Performance
    Number of shares held at the beginning
    of the period                                        3 440 790        3 548 449       4 400 065
    Shares repurchased                                           -                -         217 175
    Shares vested                                                -                -       (646 884)
    Number of share held at the end of the period        3 440 790        3 548 449       3 970 356

9.  RESTATEMENT OF THE FINANCIAL RESULTS FOR THE PERIOD ENDED 30 JUNE 2017

    As disclosed in the annual financial statements for the year ended 31 December 2017, the audited
    financial results for the year ended 31 December 2016 have been restated for the finalisation of
    the purchase price allocation of the Mareterram business combination. The relevant effects of this
    adjustment to the statement of financial position and statement of changes in equity are summarised
    as follows:
    
                                             Estimated                                 31 Dec 2016
                                            fair value    Measurement                     Adjusted
                                            at time of         period  Exchange rate       closing
                                           acquisition    adjustments    differences       balance
                                                 R'000          R'000          R'000         R'000
    Assets acquired and
    liabilities assumed at
    date of acquisition
    Intangible assets                          310 918        157 648       (15 660)       452 906
    Deferred tax assets/(liabilities)           30 181      (121 512)         12 071      (79 260)
    Total adjustment                           341 099         36 136        (3 589)       373 646
    Less: non-controlling
    interest's share                         (137 546)       (15 940)          1 583     (151 903)
    Equity holders of the
    parent's share                             203 553         20 196        (2 006)       221 743
    Goodwill relating to the parent            115 722       (20 196)          2 006        97 532
    
    The impact on the restatement of the 31 December 2016 balances reflected above on the 30 June 2017 
    reported numbers are as follows:
    
                                                                 Reported  Measurement     Revised
                                                                     June       period        June
                                                                     2017  adjustments        2017
                                                                    R'000        R'000       R'000
    ASSETS
    Intangible assets                                             363 742      141 988     505 730
    Goodwill                                                      106 001     (18 190)      87 811
    Deferred tax assets                                            50 313     (50 313)           -
    Total assets                                                  520 056       73 485     593 541
    LIABILITIES
    Deferred taxation                                             123 117       59 128     182 245
    EQUITY
    Non-controlling interests                                     138 636       14 357     152 993
    Total equity and liabilities                                  261 753       73 485     335 239

10. EVENTS AFTER THE REPORTING PERIOD

    a) Viking Fishing and Aquaculture

       Following the transaction becoming unconditional on 25 June 2018, Sea Harvest Group Limited
       with effect from 2 July 2018, has together with a consortium of broad-based black economic
       empowerment investors, acquired the entire fishing business of Viking Fishing Holdings
       Proprietary Limited by way of the purchase of selected assets, liabilities and businesses from,
       and selected shareholdings in, the respective Viking Fishing group businesses; and 51% of the
       issued share capital of Viking Aquaculture Proprietary Limited.

       The purchase consideration for the Viking Group is R885 million and is comprised of:

       1)  An upfront consideration of R565 million for the Fishing acquisition, to be settled as follows:
           -  R315 million in cash; and
           -  The issue of 19 million Sea Harvest shares at an agreed price of R13 per share (totalling
              R250 million).
       2)  R65 million for the Aquaculture acquisition;
       3)  Vendor funding in an amount of R56 million; and
       4)  Contingent consideration of R199  million based on the profit after tax generated by the
           Viking Group for each of the two financial years ending 31 December 2018 and 31 December
           2019 respectively, and that certain profit warranties having been achieved. Settlement will be
           as follows:
           -  R44 million post the 31 December 2018 condition being met;
           -  R44 million post the 31 December 2019 condition being met; and
           -  R110 million on 1 January 2022.

       Sea Harvest is in the process of determining the fair values of the assets and liabilities for IFRS 3:
       Business Combinations purposes.

    b) Ladismith Cheese
       On 27 August 2018 Sea Harvest has, through its subsidiary Cape Harvest Food Group
       Proprietary Limited, signed a share purchase agreement to acquire the entire issued share
       capital of Ladismith Cheese Company Proprietary Limited for a consideration of R527 million, to
       be settled in cash. The transaction is subject to conditions normal for a transaction of this nature.

CORPORATE INFORMATION

Registered address:  The Boulevard Office Park
                     1st Floor, Block C
                     Searle Street
                     Woodstock
                     Cape Town
                     7925
                     South Africa

Directors:           F Robertson * (Chairperson)
                     BM Rapiya **
                     WA Hanekom *
                     L Penzhorn * (Retired 2 July 2018)
                     MI Khan * 
                     T Moodley * (Appointed 2 July 2018)
                     KA Lager * (Appointed 2 July 2018)
                     CK Zama * (Appointed 2 July 2018)
                     F Ratheb (Chief Executive Officer)
                     JP de Freitas (Chief Financial Officer)
                     Mo Brey (Chief Investment Officer)

                     *  Non-Executive
                     ** Lead Independent Non-Executive

Company Secretary:   Nana Aston

Transfer Secretary:  Computershare Investor Services Proprietary Limited
                     15 Biermann Avenue, Rosebank, 2196

Sponsor:             The Standard Bank of South Africa Limited

Auditors:            Deloitte & Touche

Date: 28/08/2018 04:36:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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